Apple, Google said to be pooling $500+ million for Kodak patents

The groups wouldn't bid enough on their own, so now they're working together.

Apple and Google are indeed teaming up to make a bigger offer to buy Kodak's digital imaging patents, according to sources speaking to Bloomberg. The companies reportedly joined their two independent consortiums—which had been competing against each other for the portfolio earlier this year—in order to collectively put together more than $500 million in order to win the ~1,100 patents.

Kodak filed for Chapter 11 bankruptcy in January of this year, putting up the digital imaging patents for sale in order to slim down the company. As noted by Bloomberg, Kodak already has $830 million in exit financing (that is, money it can use to get things going again once it emerges from bankruptcy), but the money is contingent upon the sale of the patent portfolio for at least $500 million. Apple and Google had been leading their own independent groups in attempting to buy the patents, but neither group was willing to break the $500 million barrier on their own.

But now, the two teams teamed up together so they can pool their money to buy the patents once and for all. The entire group goes beyond just Apple and Google—it reportedly includes other companies like Microsoft, Intellectual Ventures (the mysterious parent-seeming company of Lodsys, the firm suing independent app developers), another patent holding firm named RPX Corp., and "Asian makers of Google’s Android phones," according to the sources.

This rumor follows a similar one that popped up in August, which claimed that Apple, Google, Samsung, HTC, LG, and others had agreed to work together to buy Kodak's patents. As Chris Foresman wrote at that time, "[t]he interest here seems to be mutual benefit, as Kodak has aimed its digital imaging patents in lawsuits against Apple, RIM, HTC, Samsung, and other smartphone makers."

"Odd bedfellows" is the phrase that comes to mind. Odder fellowships may have been formed in the world of big business, but it just boggles the mind sometimes. If enough IP and enough money are involved, I guess the blinders go on. "Let bygones be bygones! We can do this! Oh, and we'll see ya in court next week, you bastards!"

I'm surprised neither was willing to drop the cool half a billion just to have the patents themselves. I mean, it's pennies to both of the titular companies, and would provide a wealth of patents and the associated power that goes with them. Seems strange to me.

I mean, even the article mentions some of the cases these are involved in. Seems like a missed opportunity to throw some weight around given the current litigious environment. Maybe the patents aren't considered that strong, and everyone wants them to cover their backs rather than expect to get anything out of them.

I'm surprised neither was willing to drop the cool half a billion just to have the patents themselves. I mean, it's pennies to both of the titular companies, and would provide a wealth of patents and the associated power that goes with them. Seems strange to me.

I mean, even the article mentions some of the cases these are involved in. Seems like a missed opportunity to throw some weight around given the current litigious environment. Maybe the patents aren't considered that strong, and everyone wants them to cover their backs rather than expect to get anything out of them.

I think they probably want to avoid a bidding war. $500 million together, or much higher apart to prevent the other guy from getting it.

I can't help but wonder if this is a preview of things to come, the creation of patent cartels and consortiums that act as monopolies to prevent new, smaller companies from entering the field, unless they pay exorbitant "licensing fees".

This is basically a $500 million dollar tax on everyone who is successful, and indirectly on everyone who buys products.

Is it? How much did Kodak spend developing these patents? Unlike patent trolls, Kodak actually did do research and developed technology, they just failed as a corporation. In this case they may actually be buying something with actual value. I could be wrong, it may just be a collection of crappy, fairly obvious patents on things that should never have gotten patents to begin with that Apple and Google just don't want to have to fight someone over in court. In that case it is more of a tax.

I can't help but wonder if this is a preview of things to come, the creation of patent cartels and consortiums that act as monopolies to prevent new, smaller companies from entering the field, unless they pay exorbitant "licensing fees".

I hope I'm wrong.

You're not wrong, you're just a little late. We already have those cartels and consortia. Think MPEG-LA and various other diplomatically named patent pools, of which there are quite a few, in various fields of industry.

I could be wrong, it may just be a collection of crappy, fairly obvious patents on things that should never have gotten patents to begin with that Apple and Google just don't want to have to fight someone over in court. In that case it is more of a tax.

If they were substantial patents on imaging, they'd be worth a fortune. The fact that no one was willing to pay what Kodak asked means they're stupid, probably invalid patents and people are just chipping in the money to keep them out of the hands of patent trolls.

More to the point though, cameras have been around for a really long time. Digital imaging is also getting fairly old (the first commercial CCDs are way older then I am). If you go read Jefferson's original writing on the patent office when he ran it, the whole idea was to give inventors a time-limited monopoly on their ideas and then promptly pass them onto the public domain. Given the age of all this technology, everything really fundamental should have passed into the public domain a long time ago, and so there still shouldn't be substantial patents on it.

It's worth noting that one "key" Kodak patent being asserted against Apple and RIM was invalidated earlier this year by an ITC court.

During the proceedings, Apple claimed that several Kodak patents were joint-developed and in fact the property of Apple. Now they've joined a coalition of their biggest competitors to spend a small fortune on them.

I haven't seen any numbers, but by-the-dollars, Intellectual Property might soon be the United States' number one export. No wonder lawmakers and corporations are loath to reform or limit this money-making device.

I could be wrong, it may just be a collection of crappy, fairly obvious patents on things that should never have gotten patents to begin with that Apple and Google just don't want to have to fight someone over in court. In that case it is more of a tax.

If they were substantial patents on imaging, they'd be worth a fortune. The fact that no one was willing to pay what Kodak asked means they're stupid, probably invalid patents and people are just chipping in the money to keep them out of the hands of patent trolls.

More to the point though, cameras have been around for a really long time. Digital imaging is also getting fairly old (the first commercial CCDs are way older then I am). If you go read Jefferson's original writing on the patent office when he ran it, the whole idea was to give inventors a time-limited monopoly on their ideas and then promptly pass them onto the public domain. Given the age of all this technology, everything really fundamental should have passed into the public domain a long time ago, and so there still shouldn't be substantial patents on it.

You touched on it, but then rushed past without expanding. As you said "...everything really fundamental should have passed into the public domain a long time ago.... The key part here is the word "should": unfortunately companies, including the ones that are being hurt by it now, have repeatedly lobbied for and won longer patent protections. They have also consistently pushed to widen the reach of patents, including into an entire nation's genes (I'm not sure whether that one passed muster). Then there's the re-lifing of patents, that effectively means nothing ever comes out of patent protection without being discontinued and replaced by the "new and improved" (i.e. we changed one bit) product.

The fault doesn't lie with law-makers - they just do what they're told is going to be popular and will win them votes. The fault for the mess that patents are now lies squarely with companies and their lawyers and lobbiers. But that's okay, because consumers will continue to pay for it.

Two things. 1) What do either one needs Kodak patents for? It's not even their field. 2) Kodak will emerge from bankruptcy and do what without the very patents that defined it as a business?

Kodak's patents are extremely broad. Covering everything from image processing that could impact phone cameras to data compression, to signal processing. The patents here could be very useful tools for a douchebag to stop their competition. I'm guessing the thinking by Google and Apple is lets set these weapons aside so no one else can get them and use them against us. And lets be blunt. Patents are nothing more then a weapon now a days, nothing more. It would be like me purchasing a katana and saying I'm going to use it to open my soup cans in the kitchen. Anyways...How Microsoft factors into this if they come after Android? Who knows.

Now it isn't so bad after all, right, Apple & Google? Isn't this nicer than hiring expensive lawyers and throw verbal feces at each other? No, I don't want to hear any more of those "but he started ittttttt!" talk, just play nice with each other from now on, alright?

This is basically a $500 million dollar tax on everyone who is successful, and indirectly on everyone who buys products.

I don't get it. Kodak, which paid engineers to develop a huge number of imaging and other innovations, now sits with very little of value except its intellectual property.

If the correct value of those patents is zero, then why should any other firm pay engineers to develop inventions that they cannot monetize immediately, before competitors can rush in?

It sure looks like you are proposing that no private industry engage in R&D that can be easily copied. Whatever the problems with patents, I can't see how the world going forward will be supported by all research done by government entities that don't care about the value of the inventions.

What happened is that Apple doesn't want its own inventions copied, but is not interested in otherwise hobbling competitors.

Not because they're swell guys, but because spending your energies dragging others down is a stupid way to attempt to succeed. Can't think of any firm that (a) has actually tried it, and (b) subsequently succeeded. Why? There'll ALWAYS be another competitor, and you will have spent your energy on a battle that doesn't stop the competitor.

Doesn't (obviously) even work all that well against a concerted effort to steal your own actual inventions. I had an interesting discussion last night with a professional mediator who merely rolled his eyes when I asked him about the recent Apple-v-Samsung case. People playing to a different audience, their pride at risk, rather than sensible business decisions.

There already was a 'bidding war', because there was an auction, and none of the groups involved offered Kodak anywhere near $500 mil.

I don't know why these two groups would bother getting together to even offer Kodak the $500 million.Why not just let Kodak continue to flounder and fail to get any sort of meaningful cash to continue operating, and buy the patents later for way less.

There already was a 'bidding war', because there was an auction, and none of the groups involved offered Kodak anywhere near $500 mil.

I don't know why these two groups would bother getting together to even offer Kodak the $500 million.Why not just let Kodak continue to flounder and fail to get any sort of meaningful cash to continue operating, and buy the patents later for way less.

Because the bidding war would then drive them back up to their value and potentially beyond that?

500 million / 1100 patents?

Thats a lot of troll lawsuit potential, considering a few of the names in the group. Why the hell would the giants of the industry want those assbags onboard, unless they're hoping they'll sue people FOR those patents but not in the name of Apple / Google. Basically being the muscle for the mafia of technology.

There already was a 'bidding war', because there was an auction, and none of the groups involved offered Kodak anywhere near $500 mil.

I don't know why these two groups would bother getting together to even offer Kodak the $500 million.Why not just let Kodak continue to flounder and fail to get any sort of meaningful cash to continue operating, and buy the patents later for way less.

Because the bidding war would then drive them back up to their value and potentially beyond that?

500 million / 1100 patents?

Thats a lot of troll lawsuit potential, considering a few of the names in the group. Why the hell would the giants of the industry want those assbags onboard, unless they're hoping they'll sue people FOR those patents but not in the name of Apple / Google. Basically being the muscle for the mafia of technology.

So somebody is REALLY stupid, as they could already have bid the $500 million and purchased the patents. Presumably, bidders knew Kodak needed a bid of $500 million to get the other money, so Kodak was likely to reject bids lower than that and they still bid lower. I don't think Kodak can count on running another auction and having somebody new come in throwing money around.

And waiting around until after the people offering to put money into Kodak only if they sell their patents go away [as why wouldn't they, because the patents aren't that valuable], and then Kodak continues on with bankruptcy, only is even more desperate for cash and will accept less money for the patents.

"Odd bedfellows" is the phrase that comes to mind. Odder fellowships may have been formed in the world of big business, but it just boggles the mind sometimes. If enough IP and enough money are involved, I guess the blinders go on. "Let bygones be bygones! We can do this! Oh, and we'll see ya in court next week, you bastards!"

That's ahistorical. Not so long ago the CEO of Google sat on the Apple board and… the present Google CEO asked the late Steve Jobs to be Google's inaugural CEO. Tricky thing history.

I haven't seen any numbers, but by-the-dollars, Intellectual Property might soon be the United States' number one export. No wonder lawmakers and corporations are loath to reform or limit this money-making device.

This has more or less been the goal since the "information economy" was seeded as a concept back in the 90s. Never mind that the "IP" is never sold, only rented out. In essence a patent, especially a design or software patent, can be "cheap" to develop but rented out to a large number of actual producers for a premium for the next 20 years or so. That can be one hell of a ROI.

"Odd bedfellows" is the phrase that comes to mind. Odder fellowships may have been formed in the world of big business, but it just boggles the mind sometimes. If enough IP and enough money are involved, I guess the blinders go on. "Let bygones be bygones! We can do this! Oh, and we'll see ya in court next week, you bastards!"

That's ahistorical. Not so long ago the CEO of Google sat on the Apple board and… the present Google CEO asked the late Steve Jobs to be Google's inaugural CEO. Tricky thing history.

So more old boys than odd bedfellows. I recall reading an article this year about how CEO A could reach out to CEO F via shared boardrooms. In essence A would sit on the same board as B and so on, meaning that messages could be passed band and forth "under the table". end result was that a small group of people could plan large changes in the market without being seen as colluding.

Bullshit. You can not tell me that Google employees don't see the shots fired at their fleet of OEM's by Apple and don't take it personally.

Nobody takes things personally in business, except for nerd–corporation-cheerleaders without a social life. The patent trials you see are not wars, they determine the strengths and weakness of any company before they sit on a table. The rest is polarization for weak minds.

Regarding employee of said companies, well, people that actually make things are usually focused on making these things not on hating the competition.

As usual, people are fooled by media and marketing to think they there is this great war beetwen good and evil, freedom and slavery and so on. The less gifted minds fall for it.

Bullshit. You can not tell me that Google employees don't see the shots fired at their fleet of OEM's by Apple and don't take it personally.

Nobody takes things personally in business, except for nerd–corporation-cheerleaders without a social life. The patent trials you see are not wars, they determine the strengths and weakness of any company before they sit on a table. The rest is polarization for weak minds.

Regarding employee of said companies, well, people that actually make things are usually focused on making these things not on hating the competition.

As usual, people are fooled by media and marketing to think they there is this great war beetwen good and evil, freedom and slavery and so on. The less gifted minds fall for it.

While you're destroying his thesis, you might as well toss in his, and his Android Astroturfer buddies' utter blindness to patent war initiated by Google and its minions. I like to cite Motorola's 1990's actions against Japanese manufacturers over Moto's GSM patents — the very reason that FRAND terms were insisted on in subsequent work. Or Moto canceling Apple's patent licenses just weeks after the first iPhone saw the light of day, well before Apple was at all concerned about Android copying.

Kodak should make a term in the sale something along the lines of: "Non practicing entities participating in this patent pool are excluded from filing legal suits related to these patents against any and all other entities without a 2/3rd majority of stakeholders in the pool that compromises the winning bid agree to persue suit. Any and all legal restitution or settlements collected from any and all suits related to these patents are paid to the pool, and will be distributed according to pool stake to all participating members, with reasonable legal fees only distributed outside this assignment. Should legal activity without the approval of the pool be condustec by practicing or non-practing entities, those entities may be banished from receiving royalties and legal compensation from these patents by simple majority vote of the pool members." Finally "No product announced for sale prior to the close date of the patent pool sale using the technology defined in these patents that has not already been contacted by Kodak for known infringement can be sued without first beig offered fair royalty and being provided 12 months to comply with legitimate licensing or remove the patents from their product."

aka: if you don;t make stuiff using these patents, you can;t sue anyone over them unless the pool thinks you should. If you are permitted to sue, you don;t get paid, the pool gets paid, and you can only colelct your SHARE based on the size of your paticipation in the pool. Abuse this, and though you retain rights to use the patents, and still own a share, you loose all other legal rights associated with them contractually, an enforcible term which essentialyl means if you don;t have rights, the courts can;t hear your aces and dismiss it with prejudice.

This would prevent Lodsys and others from buying up parts of this pool expressly to sue over it. If it;s a pool, the POOL owns it, and the POOL decides how to sue or not sue. PRACTICING entities however would not be bound by these rules, for the patents in the pool that exist in salable products. The last line is a protection for "discovered" infringers, such that they can't simply be sued if Kodak itslef had prior chosen not to (known infringing by kodak or not).

I think simple model rules like this shoudl apply to ALL patent transfer activity from one company to another. grace periods for discovered infringement, prohibition on lawsuits from non-practicing entites, etc. I think that a non-practicing entity that buys a patent should be required to make a statement on their intended use; that for 5 years they will refuse licensing while they develop an actual product using it, or that the patent is licensed to anyone who wants it. If they declare they're making a product, and if the patent was not already FRAND encumbered, then and only then can they choose to restrict licencing and file infringement suits, but if after 5 years they have not completed a product that is intended for sale using that tech, then any cases they may have filed are dismissed, any dameges or settlements they collected must be reversed (with interest and covering 100% of the defendent's legal costs), and the patent automatically becomes forever FRAND encumbvered at that time. Buying patents should be a use it or lose it rule, and if you have no active inventments occuring with the expectation of a viable final product, then you HAVE to license it, at fair, nondiscriminatory rates. I don;t want to make the idea of a think tank or the business posibilities of buying ideas as investments illegal, we just want to define HOW that process is restricted to prevent abusive litigation and stifling of the competitive market.

Two things. 1) What do either one needs Kodak patents for? It's not even their field. 2) Kodak will emerge from bankruptcy and do what without the very patents that defined it as a business?

1) uh, lest you forget, one of the first viable commercialized digital cameras was developed as a joint effort between Kodak and Apple, and later between Apple and Fujitsu. Apple has always been extremely oriented in the digital imaging world, sells numerous digital imaging products, design their own camera hardware and software for phones and computers, and is a large shareholder of Pixar and investor in industrial moviemaking systems. Apple and Multi-media used to essentuially be synonymous. Several hundred of the 1100 patents here have apple's name as a contributor in them already.

2) Kodak is getting out of the imaging business, but it is not selling off it's stake in printing systems. Commercial scale digital printing and technology is Kodak's future. If they continue a camera line, they'll do like the others, license the patents. 80% of the tech in use in current model Kodak cameras is in fact not Kodak's tech. Loss of these patents will give them the finances they need to rebuild and refocus their business, and run much leaner. What, you think every company that makes a camera is using in-house technolgoy? nope. Kodak was VERY late to the digital game, and has only some small patent value in it. (compared to Canon, or Nikon, or Olympus, who's digital patent pools are worth billions). Kodak was always a film and print company, and that is their future.

Two things. 1) What do either one needs Kodak patents for? It's not even their field. 2) Kodak will emerge from bankruptcy and do what without the very patents that defined it as a business?

1) uh, lest you forget, one of the first viable commercialized digital cameras was developed as a joint effort between Kodak and Apple, and later between Apple and Fujitsu. Apple has always been extremely oriented in the digital imaging world, sells numerous digital imaging products, design their own camera hardware and software for phones and computers, and is a large shareholder of Pixar and investor in industrial moviemaking systems. Apple and Multi-media used to essentuially be synonymous. Several hundred of the 1100 patents here have apple's name as a contributor in them already.

2) Kodak is getting out of the imaging business, but it is not selling off it's stake in printing systems. Commercial scale digital printing and technology is Kodak's future. If they continue a camera line, they'll do like the others, license the patents. 80% of the tech in use in current model Kodak cameras is in fact not Kodak's tech. Loss of these patents will give them the finances they need to rebuild and refocus their business, and run much leaner. What, you think every company that makes a camera is using in-house technolgoy? nope. Kodak was VERY late to the digital game, and has only some small patent value in it. (compared to Canon, or Nikon, or Olympus, who's digital patent pools are worth billions). Kodak was always a film and print company, and that is their future.

Wouldn't those two points be a bit contradictory? However, I see where you're getting at; while Apple partnered with Kodak to put out the first consumer-level digital camera in 1994, Kodak was slow to manufacture and sell consumer-level digital cameras under its own brand (even though they invented what we've come to know as the digital still camera in 1975).

While Kodak did put out the DC-20 and DC-25 cameras in 1996, it wasn't until they brought out their EasyShare line in 2001 that they got really serious about consumer digital cameras; by then, they were behind the eight ball as formerly film-only competitors such as Nikon, Canon, Fuji, and others started eating away their market share in the segment over the next decade (from 40% in 2001, number 2 behind Sony, to 7% as of 2010 [seventh place in the market]), as well as suffering from the debilitating effects from managerial rot (see also the now-shuttered Hostess Brands for another example of this). They just didn't see digital cameras becoming a commodity with low profit margins and that they'd getting smaller, packing more features in less space, and winding up in all sorts of consumer electronics (including our cell phones) and they were too slow to adjust.